When the federal government delivers a plan this coming week to meet Canada’s climate targets, it will include a projection for the oil-and-gas industry that seems wildly optimistic. Despite that sector having shown little ability to reduce its total greenhouse gas emissions, it will be expected to cut them by somewhere in the range of 30 per cent to 40 per cent by decade’s end.
The reality, they say, is this is no ordinary boom. Skepticism among investors about how long it will last, and concern about the industry still facing long-term decline, has contributed to shareholder demand for immediate returns. Even if they want to, companies can’t put much of their own funds toward new production, let alone cleaning up existing operations.
Purely from an environmental perspective, the easiest way to achieve that would be to produce less. But while that could happen because of market forces, and is likelier in subsequent decades, it’s not something anyone seems to be counting on or looking to force before 2030. Pushback to those coming rules seems muted, and while there will inevitably be calls for government subsidies for related technologies, all concerned seem to agree this is the low-hanging fruit.
The generous and likely refundable tax credit for CCUS capital costs expected in the budget is unlikely to be the final ask in that regard. Industry had called for it be as high as 75 per cent, but its representatives concede that 50 per cent is likelier. The general line now is that the credit will kick-start investment, but other direct government subsidies will also be needed.
And then, as pressing as all the carrots, there is the question of how Ottawa wields its stick by imposing the sectoral emissions caps that it has promised. Like other industry representatives, Mr. Goodman suggests the best approach would be for the government to tailor existing mechanisms – carbon pricing, clean fuel standards, methane regulations – to achieve desired reduction levels, rather than adding another layer.
I wish cdnmedia would at least occasionally recognize successes in the Canadian O&G industry.
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